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Gold set for biggest weekly gain since Oct 2011 over Coronavirus fears

The metal has gained as much as 5.5% so far this week as worries over the coronavirus sent investors scurrying for safe-havens

Reuters 

gold
Spot gold was up 0.2% to $1,674.20 per ounce by 0813 GMT, having risen more than 2% in the previous session | File Photo

rose on Friday, on track to post its biggest weekly gain since late October 2011, over fears that the global outbreak could deal a hard blow to the world economy.

Spot was up 0.2% to $1,674.20 per ounce by 0813 GMT, having risen more than 2% in the previous session. U.S. futures rose 0.4% to $1,675.20.

"Gold is moving higher because are expecting further cuts and on ongoing risk-aversion right now as (wider) are concerned," said DailyFx currency strategist Ilya Spivak.

"The biggest thing here is how worried do remain about this impact."

The metal has gained as much as 5.5% so far this week as worries over the sent investors scurrying for safe-havens, with the U.S. Federal Reserve issuing an emergency 50 basis point interest rate cut on Tuesday.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.

"We've seen a consistent switch out of equities into gold as a consequence of the worsening macro backdrop, and that's something gold will continue to see in the foreseeable future," ANZ analyst Daniel Hynes said.

Asian stocks on Friday tumbled following Wall Street, while U.S. 10-year Treasury yields fell to a record low, sending the dollar to a two-month low against key rivals.

Globally, there have been over 98,000 cases and more than 3,300 deaths from the coronavirus. Mainland China, where the virus was discovered in late 2019, reported 143 new confirmed cases of infection on Thursday.

The wide-spread epidemic has forced many cities and countries to temporarily close industrial operations, while travel restrictions have weighed on service sectors.

The epidemic poses "evolving risks" to the U.S. economy and U.S. central bank officials are monitoring developments closely, New York Federal Reserve President John Williams said on Thursday. Palladium fell 0.6% to $2,516.41 per ounce.

"Palladium continues to outperform platinum but we also (have) the issue around industrial demand from the auto sector, which is being hit pretty hard at the moment," ANZ's Hynes said.

The autocatalyst metal slumped as much as 13% on Feb. 28, after hitting an all-time high of $2,875.50 the day before due to a stark supply shortfall.

was down 0.4% to $17.34 an ounce, while platinum shed 0.1% to $863.86.

First Published: Fri, March 06 2020. 13:54 IST
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